The region is projected to experience a rapid change in its population’s age structure. The proportion of citizens older than 65 will more than double in the next three decades. However, rethinking ageing in terms of health is crucial to inform public policy, argue Diego Wachs (LSE) and Andres Roman Urrestarazu (Stanford University).

Read also Private pension plans in Latin America and sustainable finance

Latin America and the Caribbean will experience a rapid change in their population structure over the next decades. The ratio between people older than 65 and younger adults, the old-age dependency ratio (OADR), will increase by 11 and 14 percentage points over the next three decades, respectively. This context will likely affect economic growth and public fiscal accounts. However, the consequences of population ageing may be less worrying than what a measure like the old-age dependency ratio suggests.

Read also New EU rules pose problems for institutions

A younger population in terms of capacity
At the biological level, the process of ageing is associated with gradual physiological changes. These changes increase the risk of many diseases and affect the general capacities of a person. Ultimately, these changes condition the capacity of individuals to achieve the goals they value, such as participating in the labour market or in social activities, according to the World Health Organization. But these changes are neither linear nor consistent, and they are only loosely associated with age in years.

Read also Spain. Inflation At 5.6% Forces Pensions Up By 2.5%

Following this qualitative definition of ageing, we developed an indicator based on the physical characteristics of the population rather than their age. We define it as the disability dependency ratio (DDR). Following similar literature, we use data from the Global Burden of Disease database to quantify the ratio between the adult population with disabilities and the rest of the adult population. The disability indicators include a variety of domains, including cognitive and physical conditions that can be quantified into years of life lived in less than full health. The detailed protocol describing our approach can be found here.

Read more @LSE